Tony's Company manufactures backpack blowers. The firm had the following inventories.

Jan 1, 2023 Dec 31, 2023

Finished goods$142,000$ 92,000

Work in process$262,000$426,000

Materials$114,000$ 90,000

The following additional data pertains to operations.

Material purchased$150,000Property Taxes Factory$ 7,500

Direct labor$400,000Utilities-Factory$15,000

Depreciation-Factory Equip$ 25,000Insurance-Factory$ 4,500

Factory Supervisor Salaries$227,500Selling and Admin Expense$200,000

Tony's Company applies manufacturing overhead at the rate of 60 percent of direct-labor cost.

Compute the following amounts for the year of 2023 (show work).

a. Create a Statement of Cost of Goods Manufactured in good form.

b. Compute Cost of Goods Sold for 2023.

c. Assume Tony's Company wants to achieve a Gross Profit of 30% of Sales -- Compute the total dollar amount of Sales needed.

d. Create an Income Statement in good form using the amount of sales computed in (c).

e. Was overhead under or over applied and by how much?

f. Show the journal entry for (e) assuming the estimate is considered to be reasonably accurate.

g. Show the journal entry for (e) assuming the amount is large enough to potentially impact the decisions of users.

h. Why does overhead need to be applied? Explain.

i. If Tony's estimated overhead for the year to be $252,000, what amount was the original estimate for direct labor cost?

Jan 1, 2023 Dec 31, 2023

Finished goods$142,000$ 92,000

Work in process$262,000$426,000

Materials$114,000$ 90,000

The following additional data pertains to operations.

Material purchased$150,000Property Taxes Factory$ 7,500

Direct labor$400,000Utilities-Factory$15,000

Depreciation-Factory Equip$ 25,000Insurance-Factory$ 4,500

Factory Supervisor Salaries$227,500Selling and Admin Expense$200,000

Tony's Company applies manufacturing overhead at the rate of 60 percent of direct-labor cost.